Bond Market Commentary : January 2024

  • icon-jam05 February 2024
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Bond Market Commentary : January 2024

Front Load


Following a robust rally in December 2023, there was an increase in US Treasury yields during January 2024. This could potentially be attributed to differing market perspectives on the timing of a Federal Funds Rate (FFR) reduction. During the January FOMC meeting, the Fed unanimously decided for the fourth consecutive time to maintain the benchmark Federal Funds Rate (FFR) at 5.5%. While acknowledging a favourable economic environment, the Fed emphasized the need for further evidence of sustained inflation decline. Despite this cautious stance, the committee judges the risks to achieving its employment and inflation goals are moving into better balance. This indicates the Fed’s statement striking a delicate equilibrium by shedding the hiking bias while affirming a reluctance to ease imminently. Consequently, a FFR cut is unlikely in the March meeting, with a more probable occurrence in the middle of the year.

The INDOGB yield fluctuated within a narrow band of 6.50% to 6.7% in January 2024. Despite the prevailing stability in the overall economic conditions, the government is actively pursuing a front-loading strategy for bond issuance. While there is an anticipation of reduced bond yields following the expected Bank Indonesia (BI) rate cut in the second half of 2024, there is a concurrent concern about potential increased yield volatility. Therefore, to effectively minimize overall risks, the government must capitalize on the existing positive momentum to issue INDOGB, especially given the current narrow yield spread between the US Treasury yield and INDOGB yield around 200 – 250 basis points.


Product Recommendation


MIDU MIDU invests in Bond Instruments with a Medium-Term segment and is categorized as low to medium risk. Investors bear the risk associated with the Bond Portfolio.
IDAMAN IDAMAN invests in Indonesian Government USD Bonds with a short duration and is categorized as medium risk. Investors bear the risk associated with the Bond Portfolio.

MIDO2 invests in Indonesian Government Rupiah Bonds with a long duration and is categorized as high risk. Investors bear the risk associated with the Bond Portfolio.


For More Information

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The opinions expressed in the article are for general informational purposes only and are not intended to provide specific advice or recommendations for individuals or specific mutual fund or investment products. It is intended solely to provide education about the financial industry. Views reflected in the content may change at any time without notice. All performance data and investment returns mentioned in this article cannot be used as a basis for calculation to buy or sell a mutual fund. This data is performance records based on historical data and is not a guarantee of future mutual fund performance. Investment through mutual funds carries risks. Investors are required to read and understand the prospectus before deciding to invest through mutual funds.

Written by

Willy Gunawan

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